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AT&T seeks stock rise
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May 21, 1997: 8:51 p.m. ET
Allen says he's disappointed with performance, vows improvement
From Correspondent Steve Young
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NEW YORK (CNNfn) - AT&T Corp. Chairman Robert Allen told stockholders at the company's annual meeting Wednesday that boosting AT&T's sagging share price is management's highest priority.
"It's priced much too low," Allen said of AT&T's stock price in a speech to shareowners. "That's disappointing to you, and it's totally unacceptable to us. The leadership of AT&T has no greater priority than to increase shareholder value."
AT&T's stock is sagging because of new competition unleashed by deregulation, heavy investment in new technology and last year's carve-up of AT&T into three companies.
In the past year, AT&T shares have traded as high as 43-3/4, but have since fallen as low as 30-3/4 just three weeks ago. On Wednesday, the stock closed Wednesday at 34-5/8, up 3/8.
Yet, AT&T remains the nation's most widely-held, publicly-listed stock with more than 3.3 million shareholders representing some 1.6 billion shares, a company spokesman said.
Some of those shareholders Wednesday openly voiced their frustration with the company's performance.
"The guidance here looks like this is the Titanic, and you're the captain," shareholder Philip Rybakowski said.
Said another: "You have made me a millionaire. Of course, I used to be a multimillionaire."
Allen stated that AT&T tried competing on price, a mistake he said it won't repeat. Instead, the company will try to differentiate itself based on service features.
Some analysts say AT&T's situation is as desperate as the one IBM faced in 1992 when it seemed overwhelmed by more nimble competitors.
"Not so," said Allen because AT&T's fundamentals -- including cash flow and its 90 million customer base -- are strong.
"This is the classic long-term/short-term tradeoff. We're accepting lower short-term earnings in return for substantial long-term growth," Allen said.
His plan was to deliver earnings per share of $5 to $6 per year in five years. That translates into annual operating earnings of $8 billion to $10 billion each year compared with the $5.6 billion the company recorded in 1996.
Among shareholder proposals up for a vote, two failed: one to lower executive compensation if AT&T shrinks further and another to cancel stock options of executives who leave before retirement.
At the meeting, Allen touted AT&T's presence on the Internet. With 900,000 customers, AT&T is the biggest Internet provider in the world, he said. He expects the business to be profitable next year. 
Reuters contributed to this report.
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